TITLE 7
Corporations, Associations, and Partnerships

CHAPTER 7-11
Rhode Island Uniform Securities Act

PART 7-11-301
Registration of Securities

SECTION 7-11-304


§ 7-11-304 Registration by qualification.

(a) A security may be registered by qualification.

(b) A registration statement under this section contains the following information and is accompanied by the following documents in addition to the information specified in § 7-11-305(c) and the consent to service of process required by § 7-11-708:

(1) With respect to the issuer and any significant subsidiary: its name, address, and form of organization; the state or foreign jurisdiction and date of its organization; the general character and location of its business; a description of its physical property and equipment; and a statement of the general competitive conditions in the industry or business in which it is or will be engaged;

(2) With respect to every director and officer of the issuer, or person occupying a similar status or performing similar functions: name, address, and principal occupation for the last five (5) years; the amount of securities of the issuer held by the person as of a specified date within thirty (30) days before the filing of the registration statement, the amount of the securities covered by the registration statement to which the person has indicated an intention to subscribe; and a description of any material interest in any material transaction with the issuer or a significant subsidiary effected within the last three (3) years or proposed to be effected;

(3) With respect to persons covered by paragraph (2): the compensation paid or given, directly or indirectly, during the last twelve (12) months and estimated to be paid during the next twelve (12) months, by the issuer, together with all predecessors, parents, subsidiaries, and affiliates, to all those persons in the aggregate;

(4) With respect to a person owning of record, or beneficially if known, ten percent (10%) or more of the outstanding shares of a class of equity security of the issuer: the information specified in paragraph (2) other than occupation;

(5) With respect to a promoter if the issuer was organized within the last three (3) years: the information specified in subsection (b)(2), the amount paid to the person within that period or intended to be paid, and the consideration for the payment;

(6) With respect to a person on whose behalf a part of the offering is to be made in a non issuer distribution: name and address; the amount of securities of the issuer held by the person as of the date of the filing of the registration statement; a description of any material interest in any material transaction with the issuer or any significant subsidiary effected within the last three (3) years or proposed to be effected; and a statement of the reasons for making the offering;

(7) The capitalization and long-term debt, on both a current and pro forma basis, of the issuer and any significant subsidiary, including a description of each security outstanding or being registered or otherwise offered, and a statement of the amount and kind of consideration, whether in the form of cash, physical assets, services, patents, goodwill, or anything else, for which the issuer or a subsidiary has issued its securities within the last two (2) years or is obligated to issue its securities;

(8) The kind and amount of securities to be offered; the proposed offering price or the method by which it is to be computed; any variation from the proposed offering price at which a proportion of the offering is to be made to a person or class of persons other than the underwriters, with a specification of the person or class; the basis upon which the offering is to be made if other than for cash; the estimated aggregate underwriting and selling discounts or commissions and finders' fees, including separately cash, securities, contracts, or anything else of value to accrue to the underwriters or finders in connection with the offering, or, if the selling discounts or commissions are variable, the basis of determining them and their maximum and minimum amounts; the estimated amounts of other selling expenses, including legal, engineering, and accounting charges; the name and address of every underwriter and every recipient of a finder's fee; a copy of any underwriting or selling group agreement pursuant to which the distribution is to be made, or the proposed form of the agreement whose terms have not yet been determined; and a description of the plan of distribution of securities that are to be offered otherwise than through an underwriter;

(9) The estimated cash proceeds to be received by the issuer from the offering; the purposes for which the proceeds are to be used by the issuer; the amount to be used for each purpose; the order or priority in which the proceeds will be used for the purposes stated; the amount of funds to be raised from other sources to achieve the purposes stated; the sources of the funds; and, if part of the proceeds is to be used to acquire property, including goodwill, other than in the ordinary course of business, the names and addresses of the vendors, the purchase price, the names of the persons who have received commissions in connection with the acquisition, and the amounts of commissions and any other expense in connection with the acquisition, including the cost of borrowing money to finance the acquisition;

(10) A description of the stock options or other security options outstanding, or to be created in connection with the offering, and the amount of the options held or to be held by every person required to be named in subdivision (2), (4), (5), (6), or (8) and by a person who holds or will hold ten percent (10%) or more in the aggregate of the options;

(11) The dates of, parties to, and general effect concisely stated of, every management or other material contract made or to be made other than in the ordinary course of business if it is to be performed in whole or in part at or after the filing of the registration statement or was made within the last two (2) years; and a copy of the contract;

(12) A description of pending litigation or proceedings to which the issuer is a party and that materially affect its business or assets, including any litigation or proceeding known to be contemplated by a governmental authority;

(13) A copy of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended as of the effective date to be used in connection with the offering;

(14) A specimen, copy, or description of the securities being registered; a copy of the issuer's articles of incorporation and bylaws, or their substantial equivalents, as currently in effect; and a copy of any indenture or other instrument covering the securities to be registered;

(15) A signed or conformed copy of an opinion of counsel as to the legality of the securities being registered, with an English translation if it is in a foreign language, which states whether the securities when sold will be legally issued, fully paid, and non assessable, and, if debt securities, a binding obligation of the issuer;

(16) The written consent of an accountant, engineer, appraiser, or other person whose profession gives authority to a statement made by the person, if the person is named as having prepared or certified a report or valuation, other than a public and official document or statement, which is used in connection with the registration statement;

(17) A statement of financial condition of the issuer as of a date within four (4) months before the filing of the registration statement; a statement of results of operations and analysis of surplus for each of the three (3) fiscal years before the date of the statement of financial condition and for any period between the close of the last fiscal year and the date of the statement of financial condition, or for the period of the issuer's and any predecessors' existence if less than three (3) years; and, if part of the proceeds of the offering is to be applied to the purchase of a business, the same financial statements that would be required if the business were the registrant; and

(18) Any additional information the director specifies by rule or order.

(c) Simplified registration for small businesses.

(1) For purposes of simplifying the registration statement for smaller offerings and promoting uniformity with other states, the director may adopt a form to be used as the registration statement for securities being registered under this section and sold in offerings in which the aggregate offering price does not exceed a maximum amount which the director may determine. The form need not require all the information included in this section and may require information not included in this section. The director at his or her discretion may also provide for expedited consideration or automatic approval of small offerings exempt from registration with the Securities and Exchange Commission under 15 U.S.C. § 3(b) which have been approved by another state with a review process substantially equivalent to the review process of the director provided that the other state agrees to provide similar expedited consideration or automatic approval to securities of Rhode Island issuers.

(2) The maximum amount that may be raised under the simplified registration procedures authorized by this subsection (c) does not exceed the aggregate offering price in Regulation D, Rule 230.504, or Regulation A, Rule 230.254 of the Securities Act of 1933 rules of the Securities and Exchange Commission, or successor rules, whichever aggregate offering price is greater.

(3) An issuer listed in this subdivision is not eligible to file applications for simplified registration under this subsection:

(i) Investment companies subject to the federal Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq.

(ii) An issuer subject to the reporting requirements of § 13 or 15(d) of the federal Securities Exchange Act of 1934, 15 U.S.C. § 78m or 78o(d).

(iii) An issuer seeking to register securities for sale by persons other than the issuer.

(iv) An issuer subject to any of the disqualifications described in Regulation A, Rule 230.252, subsections (c), (d), and (e) of the Securities Act of 1933 rules of the Securities and Exchange Commission, or subject to any of the actions described in § 7-11-212(a)(3), (4), (5), (6), and (7) of this chapter. For purposes of this paragraph, an issuer includes an issuer's director, officer, ten percent shareholder, promoter or selling agent of the securities to be offered or any officer, director, or partner of the selling agent. The director for good cause shown may waive the provisions of this paragraph.

(4) Only an issuer organized as a corporation is eligible for simplified registration under this subsection.

(d) A registration statement under this section becomes effective thirty (30) calendar days, or any shorter period as the director specifies by rule or order, after the date the registration statement or the last amendment other than a price amendment is filed, if:

(1) No stop order is in effect and no proceeding is pending under § 7-11-306;

(2) The director has not ordered under subsection (d) that effectiveness be delayed; and

(3) The registrant has not requested that effectiveness be delayed.

(e)(1) The director may delay effectiveness for a single period of not more than ninety (90) days if the director determines the registration statement is not complete in all material respects and promptly notifies the registrant of that determination.

(2) The director may delay effectiveness for a single period of not more than thirty (30) days if the director determines that the delay is necessary, whether or not the director previously delayed effectiveness under subsection (d)(1).

History of Section.
(P.L. 1990, ch. 460, § 2; P.L. 1991, ch. 69, § 1; P.L. 1993, ch. 247, § 1.)